The South African Standard Bank issued its analysis for the performance of gold prices in the commodity market for May 30. The report focused on the performance gold prices.
Studying gold prices and the correlation between gold, U.S. equities, U.S. real interest rates and USD trades for different periods, was informative. The bank analysts saw the correlations are similar to gold prices movements between 1990 and 2003.
Between 1990 and 2003, gold and equities were negatively correlated. The launch of ETFs changed this correlation into positive. This should indicate one of two scenarios; the first is a struggling gold against equities gains while the second is gold might become a better diversification tool for equities.
If the negative correlation between gold price and equities return, there will be value in holding gold. This conclusion might indicate future ETF buying for diversification purposes, which supports ETF holdings.
If the USD against EUR remained around $1.250 to $1.300, these prices should support gold at least psychologically. Physical demand should remain strong enough to support gold prices at these levels.
Gold prices pushed over $1,400 this morning. Physical buying eased at these levels, but remained strong.
Gold price current support levels are at $1,380 and $1,376 while resistance levels are at $1,404 and $1,424.